Kumpulan Wang Persaraan, Malaysia’s pension fund for public employees, is planning to double its real estate assets under management by 2025, PERE has learned.
The M$184.5 billion ($38.7 billion; €36.6 billion) AUM investor is aiming to increase its real estate assets under management from slightly below $2 billion in 2022 to $4 billion in 2025, Shakir Asri, director of property investment at KWAP, told PERE.
The AUM increase is part of KWAP’s plan for its real estate allocation to make up around 10 percent of its overall portfolio over the long term. The investor is currently halfway through achieving its $4 billion target in 2025.
To help meet its allocation target, KWAP will increase its real estate funds portfolio from five funds currently to around 15 in 2025. The pension fund’s goal is to have 60 percent of its real estate holdings in direct investment and 40 percent in real estate funds by 2025. Before 2022, KWAP only invested in real estate via direct acquisitions.
“We had been doing the investments directly in the past, but there are limitations and inefficiencies to it. And I think we are balancing it by also using other approaches in investments,” Asri explained.
Apart from growing its commitments to real estate funds, KWAP is also in the process of expanding from core to value-add and opportunistic strategies.
“If we foresee the interest rate is going to remain this high, we want to take action. We want to mitigate those uncertainties and take advantage of this environment,” he explained.
The current market presents more attractive pricing opportunities, especially for non-core assets. The investor is looking to allocate 70 percent of its real estate portfolio in core assets and 30 percent in value-added and opportunistic investments by 2025. Before 2022, it had only invested in core assets.
Meanwhile, KWAP also plans to add new investment markets to its real estate mandate. The pension plan, which currently invests in Malaysia, the UK and Australia, will expand into the US and new markets in Europe and Asia.
The US and Europe will offer more attractive risk-return investments in the next nine to twelve months, while Asia continues to provide growth opportunities from a macro standpoint, particularly Australia, Indonesia, Vietnam, and Singapore, Asri noted.
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